Brandon Leuallen, The Business Times

The Grand Junction City Council joint meeting on Jan. 14 with stakeholders of the current Impact and Linkage Fee Study stood out for an obvious reason. It’s not something the council has done previously.

And that was not lost on the stakeholders, which included representatives of local Realtors, contractors, home builders, economic-development groups, members of nonprofits, members of committees within the city, and at-large community members. 

Many of them expressed appreciation for the opportunity to engage directly with the council. And the council had been urged by new Grand Junction City Manager Mike Bennett a month earlier at a council workshop to hold the joint meeting.

Diane Schwenke, governmental affairs consultant for the Home Builders Association and the Grand Junction Area Realtors Association said, “I just want to start out by saying thank you for this meeting. We’ve all served on various committees, and the opportunity to actually be able to interact directly with the full city council is unique.”

She added, “It may be the first time that we’ve had that opportunity, and we just really, truly appreciate the opportunity that you’ve given us.”

Bennet emphasized later in the meeting that he prefers to take a holistic approach when collaborating with staff, stakeholders and city council before making a recommendation to city council during policy discussions.

As more than two-and-a-half hours of discussion rolled on, city staff were given lists of data and information to collect and bring back to council at future meetings.

Schwenke spoke about a study that was commissioned under the umbrella of Associated Members for Growth and Development.

The study was commissioned jointly by the Grand Junction Economic Partnership, the Grand Junction Area Chamber of Commerce, the Grand Junction Area Realtors Association, the Western Colorado Contractors Association, and the Home Builders Association of Western Colorado.

The cities included in the study were Boise, ID; Greeley; Montrose; Reno, NV; and St. George, UT. Notably, these five cities were included in consulting firm TischlerBise’s current Grand Junction impact-fee study.

Schwenke said the proposed maximum fee levels in the study are significantly higher than the averages of the comparison cities, and most of the comparison cities do not have as many different types of fees, and none of them impose a linkage fee.

Mayor Abram Herman questioned the list of cities, saying, “I appreciate the expertise that GJEP brings. I also am kind of wondering about the methodology of deciding that these are the cities that we are competing against. What kind of data set are we working off of in determining that?”

GJEP Executive Director Curtis Englehart responded that the cities selected for the study were based on requests for proposals issued by Colorado’s Office of Economic Development, direct business inquiries and prospect data from the past three to four years.

“So the data that we had, these five rise to the top most often,” he said. “They’re the ones that we’re continuing to see when we’re working on these proposals.”

Herman highlighted differences between the selected comparison cities and Grand Junction, specifically regarding other forms of tax revenue.

Additionally Schwenke said the city of Montrose only has a fee for parks, and the philosophy of the city is different from the city of Grand Junction.

“Montrose’s philosophy,” she said, “is we’re going to be open for business, we’re going to attract new business, and we’re going to use the revenue that we see come in in property and sales tax to then reinvest in the infrastructure improvements that we’re going to need as a result of that growth. So there’s a little bit of a different philosophy.”

Addressing impact fee uses, Bennett said, “Impact fees are not to be spent on catching up. They are meant to be for new expansion.” 

Bill Findlay, a member of the parks and rec advisory board, said the board supported city council adopting the recommended fee and felt the open-spaces requirement should be negotiated to a lower level but not reduced to zero. 

Englehart said, “We have a real opportunity to increase our competitive edge from an economic development standpoint but when we look at these impact fees and then we add the linkage fee on top of it, we’re looking at increases anywhere between 27 percent clear up to 499 percent.

“If you take the linkage fee out of that, there’s still some really large increases on the impact-fee side. And so when it comes to economic development, I guess my ask to city council is to really take a strong look at some of the unintended consequences of these large increases, because it will affect economic development and really hurt our chances going forward.”

President and CEO of the Grand Junction Area Chamber of Commerce Candace Carnahan said, “We have concerns that increased fees at the maximum rates plus additional project costs could potentially push, especially commercial development, out into the county as opposed to inside city limits.”

Grand Junction City Attorney John Shaver noted the city’s Persigo sewer system intergovernmental agreement would be a limiting factor in the amount of residential development outside of the city’s incorporated areas.

Speaking specifically about commercial development, he said, “For example, if you have a commercial or industrial kind of activity, they’ll need industrial pretreatment services. They’ll need some of the things that we provide by virtue of connection to the Persigo wastewater treatment system.”

City Council member Jason Nguyen asked if staff could address whether grant funding could be considered in the formula because grants make up a portion of the funding already for the city.

City Council member Anna Stout echoed Nguyen’s comments and asked TischlerBise President L. Carson Bise II if it could be analyzed. 

Herman used the example of the new skate park where $1 million of the $3 million cost was achieved by using grant dollars, which was in the study. 

After some discussion, Bise said if a steady stream of grants funds a significant portion of future parks, such as 40 percent to 50 percent, fees would be discounted accordingly. Using historical data, they analyze past funding trends to adjust future fees proportionally.

Stout said, “I would argue that we do have enough grant funding that we should at least consider this and look at it.”

Bennett recommended additional meetings between staff and stakeholders after information is gathered. He suggested this step before returning to the City Council, allowing for final policy discussions about the fees.

Housing-affordability concerns

The Grand Junction City Council’s meeting with stakeholders also included a lengthy discussion about impact fees affecting affordable housing.

During that discussion, Grand Junction Planning Commission member Orin Zyvan said it’s important to look at fees from the perspective of total cost.

“I mean, if you look at a 4,500-square-foot house and a $30,000 maximum supportable fee, that $30,000 is a very small portion of the cost of a 4,500-square-foot house,” he said. “I don’t feel like that’s going to make or break it for somebody to buy that house.”

President and CEO of the Grand Junction Area Chamber of Commerce Candace Carnahan responded, “Orin I appreciate your comments, but I would say for every $10,000 we’re adding to a mortgage, the payment might be attainable, but does that make it harder for a down payment? Does it make it harder for qualifying? These are questions for funding experts in the room, but we can’t just say, ‘Oh, it’s just a little bit.’”

When it comes to affordable housing, Carnahan said every dollar matters, adding, “If it’s appropriate, and we decide that as a community, fantastic, but I think we have to stop saying it’s just a little bit, because all the little bits are adding up.”

Regional Transportation Planning Office Director Dana Brosig spoke about the gap between the city’s transportation needs and the funding received from taxes, highlighting safety as a critical concern. “The needs are much higher than the funding received from taxes,” she said. “There are a lot of safety needs. Do we want our roads to be safer?”

Brosig also echoed Zyvans sentiments about the impact of fees on housing costs, framing them as an investment in the community.

“If you look at a $400,000 house, the fee is typically 2 percent to 4 percent of the cost, which is less than Realtor fees historically,” she said. “This is an investment in our community that makes it better and increases property values.”

Brosig further noted $400,000 homes are not affordable housing and suggested that such fees are unlikely to deter buyers in that price range.

“When you consider the impact on the city budget, trying to spread general-fund resources thinly across all needs is not a good way to build a community where people want to live,” she said.

Emilee Powell, executive director at Housing Resources of Western Colorado, said, “As the affordable-housing nonprofit person on the panel, of course that’s my big concern is the cost of the construction of housing. Over the 20 years of doing this, that problem has gotten worse and worse.”

“I can’t necessarily speak to Grand Junction, but just in the places that I’ve worked we used to be able to build much more for the incomes we were trying to serve. And the same amount of money that I used to be able to raise 20 years ago to help somebody at 60 percent AMI, now that’s going to somebody at 100 to 120 percent AMI, because the gap has just gotten so much bigger.”

“So, it may only sound like a little bit here, a little bit there, but you go over budget $100 at a time and at some point that person just will not qualify.”

Powell added, “The biggest concern I have is that for the community to really provide affordable housing in a meaningful way, it has to come from the for-profit sector. The nonprofit sectors do not have that capacity to really make the community affordable. We can work at the margins.”

“So, if it becomes not affordable to build those modestly sized units, whether they’re rent or for sale, that’s when we do not have affordable housing anymore.”

Need for linkage fees questioned

Grand Junction developer Kevin Bray questioned the continued focus on inclusionary zoning and linkage fees in the City of Grand Junction housing strategy update. He highlighted that cities who use them have much higher wages, and he cited a survey of stakeholders in which one out of 100 ranked linkage fees as the most important strategy.

Bray said of the linkage fee specifically, “I don’t get it. It doesn’t seem necessary, and it does not seem like the right tool for Grand Junction. … I question why we are still talking about linkage fees when there seems to be so little support for it.”  

Candace Carnahan, president and CEO of the Grand Junction Area Chamber of Commerce, expressed concerns about the impact fees affecting existing businesses that are looking to expand or change their use. 

“When you’re looking at the Independence Academy gym that’s currently going through the planning department, the linkage fee, if we adopted everything at the maximum allowable rate with the linkage fee, they’re seeing an additional $250,000 price tag,” Carnahan said. “That’s a lot of dollars, and we’re not talking about a manufacturer or a business. We’re talking about a gym for the kids.”

Later in the meeting Bray referenced confusion and discussion around linkage-fee formulas. 

Bray elicited laughter from the room when he said, “You can get a good look at a T-bone if you stick your head up a bull’s a**…. Well, I’d rather take the butcher’s word for it.”

Rather than debating the formulas, Bray urged having a broader discussion on housing affordability, emphasizing the need to address planning-department deficiencies as well. 

Bray highlighted the cumulative financial impact of incremental decisions, saying, “When we make these decisions in a silo, each time we can explain that this is only $2,000, or this is only $3,000. But when you add up all the times we’ve done that over the last couple of years, it amounts to tens of thousands of dollars.”